Budget Hearing - April 26, 2006
Minutes
BETHLEHEM AREA SCHOOL DISTRICT
BOARD OF SCHOOL DIRECTORS
BUDGET HEARING #1
APRIL 26, 2006
BUDGET HEARING #1
The first 2006-2007 budget hearing of the Board of School Directors of the Bethlehem Area School
District was held on Wednesday, April 26, 2006, beginning at 6:05 p.m., in the Auditorium of East
Hills Middle School, 2005 Chester Road, Bethlehem, Pennsylvania.
MEMBERS PRESENT
Members present: Directors Amato, Craig, Dexter, Heske, Koch, Leeson, Rowe, Williams, and
Haytmanek - 9.
OTHERS PRESENT
Others present: Dr. Joseph A. Lewis, Superintendent of Schools; Stanley J. Majewski, Jr., Board
Secretary; administrators, members of the press, and other interested citizens and staff members.
Director Koch chaired the meeting. She explained that the meeting gives an opportunity for the
administration to present their budget. She requested, therefore, that speakers during courtesy
of the floor present only comments, rather than questions. She asked board members and others to
wait until the end of the presentation by the administration before asking questions.
DR. LEWIS - INTRODUCTION OF BUDGET
Dr. Lewis stated that public and board have had an opportunity to read the Letter of Transmittal
and look at the preliminary budget proposal. Mr. Majewski will review a series of graphs and
charts that give detail to the revenues and expenditures. Following Mr. Majewski's presentation,
some adjustments will be noted that administration was able to accomplish over the last two days.
Then, questions can be entertained from the board and public.
Mr. Majewski stated that, as all know, developing the budget is not an event; it is a process. We
continue to go through the budget to look at adjustments either to revenue or expenditures in
order to be able to get the budget lower than it is right now. Depending on what happens with the
state, there may be some adjustments in the other direction. It is a process that, by the end of
June, must be completed. The purpose of the budget hearing is to present the budget, to help
everyone better understand the document. A very important part of the process is everyone's
involvement. Time spent by others going through this document is appreciated. The budget may not
always be acceptable to everybody, but at least all understand that it is the best possible budget
that can be hammered out by the end of June.
MR. MAJEWSKI- REVENUES
Mr. Majewski gave an overview of the revenues. The 2006-2007 proposed district budget totals
$158,748,494 as part of the general operating budget. The middle column of the slide showed the
federal, state, and local grants budget. Those are restricted funds. That spending is not
something that can be addressed during the budget process. However, although most discussion will
be on the district budget in the left column, when a final budget is approved, it will include
those grant funds that are anticipated. That will be the number in the lower right corner.
Mr. Majewski explained that $158,000,000 is part of the general operating budget. Of the
$158,000,000, 74 percent comes from local revenue, roughly $117,000,000. The state's portion of
our budget, as it is being proposed, is 23.76 percent. Federal revenue is $50,000. Fund balance
used to help balance this budget is $3,000,000. Transfers from our proprietary or enterprise
funds including child care, as well as our food service operation, are shown as other financial
sources of $301,000. Of the $117,000,000 local revenue, current real estate tax is the largest
number. The other taxes that are assessed are set by legislative action. Real estate tax is the
one item that, by setting the millage rate, can be controlled in this budget. In this budget, the
increase in this budgeted revenue item is $6,988,000, a 7.94 percent increase. Interim real
estate is notable, not because of the dollar amount, but because of the increase. There is a
local economy that is healthy.
Interim real estate tax bills are generated by construction activity. A healthy construction
environment continues in the valley. That is generating additional revenue.
Another area of substantial increase is earned income tax. As employment base grows and folks are
getting increases in earnings, the district will be able to obtain additional funding from those
sources.
Real estate transfer tax is an increase of $500,000, another result of the real estate market in
the area which is very healthy and still booming.
Delinquent real estate tax shows a decrease. The reason for the decrease is that as the district
collects a higher percentage of taxes in the current year, a lower percentage is turned over for
delinquent tax collections, decreasing that number. That is a healthy sign. Part of what is
occurring is in the lower interest rate environment, people were refinancing and buying new homes.
The mortgages they were taking on usually have escrow requirements. Instead of sending the bills
to individuals and having them pay the bill, they would turn it over to their mortgage company and
the company would then pay the school district the current real estate taxes that are due. Since
they generally pay within the discount period, it really increases the collection rate of the
current real estate taxes.
Interest on investments is a significant increase. For some, what is going to be a less desirable
trend is a very desirable trend when it comes to interest on investments. Those who follow what
has been happening in the business world know that the Federal Reserve has increased their Fed
funds rate about 18 straight times. That doesn't necessarily generate additional interest for
the district, but it increases the short-term interest rate. Since most of our funds are in
short-term or money market type of investments, the district is restricted by law as to what it
can invest in. As that rate has increased appreciably, the investment income received has also
increased dramatically.
The Local Revenue Sources chart shows how significant current real estate taxes are to the local
revenue base. Mr. Majewski stated that since the district is so dependent upon current real
estate, the assessments that happen in each of the municipalities and their growth are a very
important factor and very carefully monitored. Five municipalities make up the Bethlehem Area
School District: Freemansburg, Fountain Hill, Hanover Township, Bethlehem Township, and the city
of Bethlehem. Freemansburg did not change much for many years. There has been some recent
activity, adding to their assessment base. Fountain Hill continues to be fairly flat. Fountain
Hill does not have much land that can be developed. It is anticipated that it will continue to be
the same, showing very little, if any, growth in assessed values. Hanover Township and Bethlehem
Township have been the two largest percentage generators of assessment value. Hanover Township
has had long-term, fairly stable growth. Bethlehem Township has had higher incremental growth
than any other municipality within the Bethlehem Area School District. That is very good for
budgeting purposes because you can depend on it. The district is closely monitoring the future
activity within those two townships. The city of Bethlehem has been a laggard. Bethlehem Steel
has put a strain on the assessed values within the city. Starting around 2002-03, growth has
occurred. Since Bethlehem is about one half of the total assessed value, continued growth in the
city of Bethlehem is very important. During this upcoming budget year, combined growth is almost
a total of two percent, 1.97 percent, definitely a reflection of continued growth seen in Hanover
Township, Bethlehem Township, and very healthy growth starting to be seen in the city of
Bethlehem, as well as some assessment growth in Freemansburg.
Mr. Majewski pointed out that collectibility is monitored. A 96 percent collection rate has been
used for purposes of this budget.
Mr. Majewski commented that the Historical Analysis of Revenue shows that real estate tax and
local revenue have been a significant part of this budget for many years. Roughly 75 percent of
the budget has been from local sources. This year the state portion is budgeted at 23.3 percent.
Its pattern has not been growth, but a decline. He attributes to Governor Rendell that the last
couple of years there has been an effort to try to increase this number by more than seen in the
past.
Mr. Majewski stated in this budget the proposed budget millage rate is 37.56. Annual increases
have been somewhat choppy as of late. Mr. Majewski stated he likes to look at both long-term and
short-term trends. The 10-year increase in the millage rate has been just a bit over five
percent.
Mr. Majewski stated that state revenue is an important but smaller portion than the district would
like to see. He reviewed its components. Just as real estate tax is important in local revenue,
the basic instructional subsidy is the big driver in state revenue. In this proposed budget,
right now in the governor's office, there is a very healthy increase. Whether it will survive the
state's budget process is to be seen. The budget is based upon his proposed budget. The second
largest portion of the state subsidy comes in the form of special education subsidy. The state
provides 50 percent subsidy for the district's FICA and PSERS payments.
Mr. Majewski said fund balance is a term that probably is a mystery to most folks. If you would
look at one's savings account, after receiving income and paying bills, the money you can put into
a savings account is a way to describe fund balance. In the state of Pennsylvania, there is
legislation in place that caps the amount of fund balance a school district our size is able to
maintain. The limit is eight percent. In addition, there is a board policy that allows keeping
money in a contingency. The fund balance has been under eight percent in all years, most of the
time in the five percent range. Currently, 5.4 percent of the budget is fund balance.
MR. MAJEWSKI - EXPENDITURES
Mr. Majewski said that some of the expenditure trends he needs to point out are that salaries and
wages were about 57.8 percent of the 2000-01. In the current 2005-06 budget, it was 52.1 percent.
Salaries and wages is decreasing as a percentage of the overall budget. However, in looking at
the combined total, $108,000,000, the total compensation paid to staff is approximately 70
percent. Total compensation has been about 70 per cent of overall budget. Even though this has
been going down, the cost of employee benefits has been rising.
Mr. Majewski stated, even though the dollar amount has gone up, the strain of debt service on the
budget as a percentage has stayed relatively stable.
Mr. Majewski stated equipment as a percentage of the budget has gone up a little. It is a very
small percentage of our budget.
Mr. Majewski explained that both items shown in Intersystem Payments is split up. Charter Schools
includes cyber schools. A cyber school is a charter school. Prior to 2002-03 it did not exist.
Removal of charter schools from the intersystem payments enables taking a look at a slight
decrease as an overall part of the budget. The driver, when looking at the growth of intersystem
payments, has been charter schools. It went from payments of $1,257,371 in 2002-03 to $3,013,500
in 2005-06.
Mr. Majewski stated textbooks and software has remained fairly stable. All other costs has also
been fairly stable throughout these years.
Mr. Majewski stated that health costs have come under scrutiny, nationally, for good reason. The
number of subscribers listed includes staff and those on COBRA. COBRA is an acronym for
Consolidated Omnibus Budget Reconciliation Act. When an individual leaves group insurance, the
district is required, for dependents and individuals, to offer to stay on the group health
benefits for a specified period, depending on the reason for the break in service, of either 18 or
36 months. It is not free to these people. The district charges full cost plus two percent for
administrative costs. The cost per employee in 2000-01 was $5,605. Because the district is
self-insured, this tends to be a roller coaster, so trends are studied. The trend has been an
increase of about 12.1 percent from 2001-01 to 2005-06. Prescription drugs has been one of the
more onerous costs; now it is starting to moderate. He is grateful for the 2005-06 decrease.
Some changes have been made in the prescription program. Generics are playing a big role in some
of the reduction of costs. Even with that, it has a 14.6 percent average over this period time,
still higher than what is happening in hospitals. Dental is one of the most stable benefits
concerning costs. The 2005-06 decrease is attributed to another change made in restructuring of
benefits during the last year, taking greater advantage of a network and lower cost payments to
the dentist. The two areas that have been the biggest concern have been hospital/physician
benefits and prescription drug benefits. Combining these and trying to factor in a cost per
employee, it is expected that costs will be about $8,269 per employee. Average increase over this
period of time has been 9.27 percent.
Mr. Majewski stated that fuel oil, as part of the budget, is not that large, but natural gas is.
In July of 2005, it went through the roof and stayed there. Natural gas is the major source of
heating for our buildings. He does not see that this trend is going to change significantly in
the short-term. Most electric plants are run by natural gas. When the cost of natural gas goes
up, so does the electric bill. There has been a tremendous increase in this part of our budget
for electricity and natural gas.
Mr. Majewski reviewed a pie chart of comparison between the proposed 2006-07 and 2005-06 budgets
of expenditures by major function. Regular instruction is the largest portion of the budget,
followed by special education, other instructional programs, and community college. When looking
at how much of our budget is going for instruction, those four items are included. Of the current
year budget, 68.36 percent is spent on instruction or student instructional support. Included in
student and instructional support are guidance counselors and libraries. In the proposed budget,
that amount is 67.51 percent, a decrease of about .85 percent, less than one percent. There is
about a $2,000,000 increase in operation and maintenance of plant. Of that $2,000,000 increase,
$1,200,000 is just for the increase in electricity and natural gas. Those factors are pulling
money away from the instructional program, as a percentage, not necessarily in dollars. Operation
and maintenance of plant is growing much faster than the money the district is putting into
instruction.
Mr. Majewski said that as of April 2005, 419 students were enrolled in the local charter schools
plus cyber schools. The Regional Academy, in April 2006 had 29 more students. The Performing
Arts School went from 66 to 79 students. Vitalistic Therapeutic has shown a decrease from 13 to
nine students. Last year, we had one student in Vitalistic's half-time kindergarten program.
There are no half-time students this year. Cyber schools increased from 34 to 62 students.
Mr. Majewski stated that about 70 percent of the budget is employee benefits and salaries - total
compensation for employees.
Contracted services can be instructional services provided by places like the Community Service
Foundation, includes payments to the Intermediate Unit, payments for engineers, auditors, legal
counsel, doctors, dentists, and so on.
Other Purchased Services stated I.U., etc. Very little of that would be Intermediate Unit
related. It is also conferences, mileage, travel, postage, insurance, and telephones.
Supplies would include natural gas, electric.
A big portion of 800 and 900 is debt service.
Mr. Majewski reviewed 2006-2007 proposed Expenditures by Object. The district is a very
labor-intensive organization compared to other types of expenditures.
On the 2005-06 Comparison to 2006-07 Expenditures by Object, the supplies portion increase is not
due to buying more, but is the natural gas effect.
Dr. Lewis said that it was announced to the board the other evening that Senate Bill 39 was
looming. He received an email about five o'clock that it is still looming. They are down to that
one single item. We will see an index, in all probability, for this year. The cabinet discussed
this issue at the Tuesday morning meeting. It was decided that a closer look at the budget was
needed immediately. Yesterday, cabinet met again and worked for a good bit on areas where
adjustments could be obtained. Copies of the adjustments were distributed. He stated he and Mr.
Majewski would address the adjustments and the rationale as to why the adjustments are being
presented now and there was not an opportunity to see these previously.
Director Leeson asked Dr. Lewis what the index is that they are indicating at this time.
Dr. Lewis replied that our index is about 4.7 and has been posted on the PDE site, calculated on a
base of 3.9 percent combined with our aid ratio of .4548, which is above .40 that provides for an
upward adjustment.
Dr. Lewis stated that, as the interest rates continue to creep, ironically it is an advantage to
those who have investments. The school district, as a result of its healthy position, does have
investments.
Mr. Majewski explained that when he originally calculated what he would anticipate as investment
income, he was tracking some of those trends. However, more recent information appears to suggest
a more rapid increase in what short-term rates are going to be. By applying some of those
increases to available district funds, he was able to increase the budget by about $200,000. The
decrease in real estate tax is the residual number when you look at increasing the revenue by
$200,000 and the various expenditure decreases. Dr. Lewis asked that it be kept in mind that an
adjustment in revenues becomes a positive. The decrease in expenditures becomes a positive on the
impact on reduction of the overall millage impact. Dr. Lewis said that various cabinet members
would speak on some of the adjustments.
Mrs. Lutcher said that the rentals are being moved to a grant allocation as opposed to the budget.
The rentals are for hardware and some software. The books, periodicals, and administrative
software are exactly that (software to go on the computers). Equipment replacement is some
equipment replacement at the elementary schools. Infrastructure is the infrastructure to support
those computers which would be servers, switches, and wireless technology.
Dr. Lewis explained that the EETT Grant, basically, is the source. That will be funded at a
significantly lesser amount, going from the 80s to the 40s in terms of percentage. About $200,000
can be shifted to the EETT Grant.
Mr. Gilliland stated that due to not doing a lot of moving this year, it was felt that vehicle
rentals could be reduced. Because of some work our employees will be doing, the cost of boiler
repairs could be reduced. Part-time summer help was reduced by $10,000.
Mr. Majewski spoke about utilities. During Act 72 the time for preparing the budget and getting
it approved was one of the objections. Over time, you get more current information, you can
recalculate and refine. When the original projections were for electricity this year, they drove
out $2.5 million necessary to fund the electric bills for next year. However, as more information
is received and by studying trends, he is comfortable with reducing that budget by $200,000 to
$2,300,000 million from the current figure of $2,500,000.
Mr. Gross said that the Salaries - Professional CG item will come out of the substitute teacher
allotment. Some major restructuring efforts are being made in terms of the recruitment of
substitute teachers and the utilization of substitute teachers. Currently, that is over a one
million dollar item in the budget. It is thought that $100,000 in that category will allow the
district to secure what is needed for substitute teachers. The $200,000 in Salaries -
Professional is due to 31 retirements on the books and nine resignations. As you lose some of the
upper-end salary personnel to retirement, you acquire new hires at a lower step on the salary
schedule.
Dr. Lewis stated on the original analysis approximately $250,000 was budgeted. Now the amount is
a $450,000 differential.
Dr. Lewis stated that the impact is a .37 mill decrease. The preliminary proposal contained a
1.98 mill increase. This brings it down to a 1.6 mill increase, or 4.53 percent. At this point,
the budget is at less than the projected index. Director Dexter directed questions to the
technology area of the budget. Ninth grade laptop computers have been proposed. The board has
not been presented with those plans in the formal manner about the roll out of ninth grade
computers. She asked if there is a plan to do so and, if so, when.
Dr. Lewis replied that there is a plan in the making. Should the board not endorse it,
administration would not invest the time in detailing it.
Mrs. Lutcher explained that meetings have taken place with building administration and department
heads at both high schools. Mr. Villani, Mr. Arbushites, and Miss Zundel (SKILL-21 project
manager), the high school technology integration specialists, and herself talked about SKILL-21 as
it is now, what is taking place in the classrooms and the unique instances at the high schools and
whether to continue in that vein or make some modifications at the high school level. At the
middle school there is teaming, but not at high school level. Not all classes have just ninth
graders. Not all ninth graders take the same courses at the same time. There are vast
differences from middle school to high school. Another item is that homeroom situations are
different. Several meetings concerned whether or not to pursue, whether to pursue a true
one-to-one and make some kind of modification on one-to-one. Department heads and administration
were very enthusiastic to move ahead with this. The group decided to use the ninth grade as a
starting point, that eighth grade students coming from the middle schools are so advanced and so
used to using the technology that they wanted to move ahead. They want to be sure to impact all
departments: English/language arts, fine and practical arts, foreign language, mathematics,
physical education, science, social studies, and special education. The number of carts that
would need to be available on any given period for all the ninth grade courses scheduled during
that time period was determined. Then, the number of carts that would be available to each of the
departments was determined. Infrastructure, printing, and software were studied. Mr. Arbushites
spent a considerable amount of time working with department heads at both high schools in the
curriculum link and how the computers would be used, continuing the skills emerging from the
middle school and carrying those on to the high school level. The number of carts and number of
computers per cart were determined. Department heads returned to their teachers for further
discussion. The number of computers for Liberty is 565 and for Freedom 460.
Director Dexter stated she understands from a meeting she had today with Mr. Majewski that there
would be additional personnel (four technology positions and a network specialist) added to the
technology budget for next year; however, she could not find where this is shown in the budget.
Mrs. Lutcher said that in the cabinet budget process the number of positions originally requested
was reduced. In order to get more pairs of hands, she had asked Dr. Lewis to hire technical
assistants instead of hiring support technologists. A technical assistant is a 10-month position
in a contract similar to a teachers' aide. They do technical work, not at the level of a support
technologist. The support technologists are very well trained and need more hands to do routine
work not requiring as much training. Those are listed on page 42 - Salaries - Technical.
Dr. Lewis stated that contracted increases are incorporated in line 40, but approximately $72,000
is for four technical assistants. The network specialist already in the budget is not a new
position, but a reassignment.
Director Leeson said she noted that information technologies in 2003-04 had actual expenditures of
$527,625 to a projected $1,894,747, over a 300 percent increase in a four-year period. She asked
where the measurable results are. She will not be prepared to pass a budget that has items in it
that have not been reviewed and discussed prior to the budget approval process.
Director Koch said she wondered when she could expect the updated report in addition to the part
she received on information technologies.
Mrs. Lutcher said that will be provided to Dr. Lewis by the end of the day tomorrow for inclusion
in the board packet at the end of the week.
Director Williams stated the largest increase she sees in the technology budget is in rentals and
lease. She presumes that would be the new equipment for the ninth grade roll out.
Mrs. Lutcher replied that it is two parts. It is for the ninth grade. Also, part of the lease
agreement from this current school year was done as a grant. Again, the EETT grant has been cut
significantly. The district is looking feverishly to replace those grants. That has a very large
increase both because of new lease for the ninth grade plus continuing to pay for what was offset
significantly by grant money last year.
Dr. Lewis said that also the anticipation of additional sites within the district; i.e., the
Career Academy, the Fountain Hill kindergarten; both requiring infrastructure and equipment have
been factored into this increase.
Mrs. Lutcher remarked that when talking about hardware costs, it is not only for laptops. It also
includes carts, the infrastructure, the switches, the cabling, routers, hubs, and servers to
supply those laptops. There is a lot that goes on behind the scene.
Dr. Lewis pointed out that on page 42, line 440, has been reduced by $106,500 in a shift to
grants. Line 640 is minimally reduced by $12,000. Line 760 is reduced $33,000. Infrastructure,
line 740, is reduced $48,500. Those numbers reduce this from $200,000 to $1,694,000.
Director Williams asked if the money for the four new technology assistants is coming from other
positions that we no longer have.
Mrs. Lutcher stated that these are additions.
Director Williams asked if the one network assistant is also a new position.
Mrs. Lutcher explained that the position is a transfer, a movement of a position.
Director Williams said she presumed that the printers would be wirelessly connected to the
computers.
Mrs. Lutcher replied that the printer would be a wireless so that the laptops, which are wireless,
could print from any location in the classroom.
Director Williams commented that several printers would still be needed, given the size of the
high school.
Mrs. Lutcher said that there would be one printer per cart. A cart will service one classroom.
Instead of locating a printer in every classroom and waiting for the cart to come, the printer
will go with the cart wherever it is needed.
Director Koch suggested an update on page 42 since so many items are now changed and being offset
by grants.
Dr. Lewis said that it will be done. The change in the information technologies budget reflects
it being reduced from $1,894,747 to $1,694,747. A fresh copy of that will be provided.
Mr. Majewski stated that, because quite a number of these documents were printed, whenever there
are updates, he will be glad to provide the board with copies of those updated pages. He will try
to roll out any updated pages to the document on the web site so that the public will have an
updated version, instead of having to reprint the document for every public hearing.
Director Amato said some of his concerns are staffing and leases. If the Career Academy and new
alternative education program are implemented that will consolidate three alternative education
programs into one. When administration came to the board with this alternative education program,
it stated that there would not be an increase in staffing, that the alternative education program
could roll out with the present staffing in various programs currently in place. In addition to
the program absorbing the current four vo-tech prep and two CA/MP instructional staff members, an
additional two teachers are added tentatively for the elementary portion of the program. That
represents a total of 12 teachers. That means an increase of four additional staffing.
Mr. Villani explained that when the original plan was proposed elementary and middle school was to
be together and CA/MP not be functioning. It was asked that a CA/MP-like setting be considered,
having the middle school students not with elementary, but as a part of the Career Academy. To do
that, based on the request of the board, the two teachers were added to continue that CA/MP
programming. The additional positions listed are the positions that are presently serving as
ancillary staff members: a guidance counselor, a behavior analyst, and the social worker. There
are a number of positions in addition to teaching staff that would be working at the career
academy that will, hopefully, be funded through grant funds. The two additional positions were
added so that a CA/MP program could be maintained as a part of the Career Academy.
Director Amato said that is not what was discussed with the alternative ed program. Originally,
the present programs were to be combined to roll out an alternative education program. He stated
he wants to see all present staffing, present alternative ed program, proposed new alternative ed
program, and a staffing number. He wants to know what that staffing is based on. Out of the
total, he wants to know how many new positions are going to be added and how many positions are
going to be grant positions. That is scary to him because grants come and go. When they go, the
school board has to fund those staff allocations. He is not saying that he is against the
alternative ed program and the Career Academy, but it seems it has changed since the original
proposal.
Mr. Villani said he will prepare a list of present and proposed staffing and where the funding
will come from. It will be available for Friday's packet.
Director Amato said there are staffing increases of 13.8. He understands that if we stay with our
classroom guidelines that we need 13.8 more positions. Adding that to the five positions for the
laptop initiative, before you know it, 20 plus additional positions are needed. That is a very
expensive proposition. He needs to know real justifications.
Mr. Gross explained that currently we are looking at seven classroom teaching additions. Those are
all at the high school level as the bubble moves through the district and as 318 new enrollees are
projected. The high schools will gain close to 300 as students matriculate from middle to high
school. Tentatively, two additional science teachers are proposed at Liberty, two social studies
teachers at Liberty, a language arts teacher, and a math instructor at Liberty, as well as a
part-time health and PE teacher. The net add at Liberty is 5.1 teachers when considering the loss
at Liberty in terms of almost a full teacher in business and family consumer science. The
business teacher is a retirement plus the business teacher is not needed there. Family consumer
science is due to a reduction in students taking the course. Liberty needs 5.1 and Freedom needs
1.9 additional teachers. Freedom's will be in the areas of science, math, and world languages.
Director Amato remarked that Mr. Gross mentioned the bubble is going through our system and now
hitting the high school. He asked if it has had any effect on the number of students going
through elementary and middle school where there has been a decrease in students that will see a
decrease in staffing in either elementary or middle school.
Mr. Gross replied that middle school has flat-lined, staying within the staffing guidelines.
Elementary is down about half of a teacher, a kindergarten section.
Director Amato asked if the elementary staffing includes the addition not presently in place for
full-time kindergarten. In other words, if the half a teacher reduction in the elementary level
includes increases in full-time kindergarten that we don't have in schools today.
Mr. Gross said that the increase in full-day K is not part of the general operating budget. That
will be grant funded through the PA Block Accountability Grant. Three full-day kindergartens are
being proposed through the Block Grant.
Dr. Lewis said that last year's kindergarten additions were also funded through grants and remain
funded through the same grant.
Director Amato asked Dr. Lewis if he sees those grants continuing.
Dr. Lewis replied, "As long as the current (state) administration is in charge." That is an area
we could retreat from if funds were eliminated or reduced.
Director Amato said this room would be packed with kindergarten parents if that would happen.
Director Rowe, concerning professional positions being funded by grants and the fact that grant
money goes away, asked how often that happens and what the impact has been in the past.
Dr. Lewis said that outside of the special education title money, the district has not seen that
decline. Even new categories have arrived. They tend to be increasing the categorical monies to
drive what certain administrations feel is important. An example is early childhood.
Mrs. Cintron said that up until last year, particularly in Title I funding, the district had never
realized any loss of teachers due to funding. Last year, a couple of positions were cut back in
anticipation of level funding because, if the funding remains level and teacher salaries go up, it
must be anticipated. As it turned out, the district got a little bit more money. Over the last
five or six years, the district has not had to cut back on staff because of loss of funding. This
year, in the Accountability Block Grant, the district actually got an increase which is why the
extra full-day kindergarten positions can be done. As Dr. Lewis said, these are the Rendell
initiatives. She believes as long as the current administration is in place, that funding will
continue to come forth.
Director Heske said he is concerned about the PSERS contribution. We all know what happened to
the legislative pay raise. We need to go back and revisit the great pension rip off of 2001,
exactly what happened there, and how that will impact the district. He thinks it is very
important to understand that we are going to have to start putting the money in the bank just like
companies do as far as paying for future retirements costs.
Mr. Majewski stated that Act 9 of 2001 is truly a sleeper and the harsh effects remain to be felt
in future years. Mr. Majewski said some effects are a result of the way they look actuarially at
making their adjustments. The state has increased the multiplier from 2 to 2.5 for those
individuals who are in the system. But the corresponding increases in contributions have not
followed. The employee had a significant increase, but the employer's contribution which is
shared by the state was low. We are starting to see the increase. It is a 37.7 percent increase
in the proposed budget. He anticipates, based upon PSERS' projections, over the next several
years - 2008, 2009, 2010, 2011, 2012 - you will probably see the contribution rate go up slightly
and possibly even decline. What happens between 2012 and 2013 is almost unconscionable. The rate
PSERS is projecting in 2012 at 5.46 percent is scheduled to increase to 22.52 percent in one year,
in 2013. For next year, 2007, the rate has been set at 6.46 percent. For 2008, the rate has been
set at 7.15 percent; 2009 at 6.78 percent; 2010 at 5.83 percent, 2011 at 5.50 percent; 2012 at
5.46 percent, 2013 at 22.52 percent.
Director Amato asked why PSERS sees it increase to 22.52. Baby boomers should be retired by then.
He asked what the state is going to do to help the taxpayers with the pension rip-off of '01.
Mr. Majewski said his guess is the reaction that will be seen is very similar to when this bubble
was seen before when it went through. Because of the concern of rapid increase in rate, they will
find another way to create an actuarial adjustment and will probably lower the rate. Since the
expenditures that they will be paying are not going to be decreasing, it is going to create a
larger unfunded liability and, if not careful, the Pennsylvania School Employe's Retirement System
could have similar problems to what you are seeing in other retirement systems, having difficulty
being able to fund all of their obligations. The state is responsible for 50 percent of the
costs. Since they will not want to pay for 50 percent of 22 percent, they will find a way to
lower the rate.
Director Amato said we have six years before the retirement bomb hits. He would rather start to
do whatever needs to be done before it hits over the next half dozen years to stop it from
happening. He asked if there is anything the district can do to start to plan on how not to have
this bomb hit us. It will be a disaster.
Mr. Majewski replied that this is where the projections are right now. Folks are expressing great
concern because those that are familiar with the system have the same information from their web
site. Looking at where it's going and the potential problems to be created in a couple of years,
they are trying to find a more reasonable way to be able to approach the retirement system. He
does not know what the end result of that conversation will be, but he anticipates that something
will occur prior to that sharp increase in 2013.
Director Heske said that in 2001 our dividend income went way down. The district's income, as
well as the state's, dropped about 40 percent. It has been coming back a little bit, but that
doesn't recover the district from some really bad years. The additional thing now, it used to be
that we never paid teachers and principals too much, but always thought it was like the military,
we would give them a good retirement. Now, under this change in accounting laws, you have to put
the money away. That is a new requirement of GASB 45 and will have a big impact. The district
will be like any other company, essentially, and will have to have pension reserves.
Mr. Majewski said that is correct. However, even with some of those accounting changes and
funding requirements, there is still a bit of discretion on the part of the organization where
they are projecting out their returns. You are still seeing the potential for an unfunded
liability that may be somewhat of a sleeper. It is a concern all have because one way or the
other it is going to need to be resolved. The Pennsylvania School Employes' Retirement System was
and continues to be a well-funded retirement system. The concern is not so much in the short
term, but in looking at a longer-term resolution to the problem. He can see that there is a
problem there that is going to be large and is going to need to be addressed now so that in those
future years such as 2013 it will not be such a shocking result.
Director Heske stated that retirees are living longer. All these factors start adding up. There
doesn't seem to be much good news on the horizon.
Director Craig remarked that he thinks that conversation is a good one. But he is not clear on
something concerning staffing for the Career Academy listed on the second page of the Letter of
Transmittal, expenditures, the fourth bullet that starts with Career Academy. The Career Academy
is going to be comprised of four Vo-Tech Prep people who are coming from Vo-Tech, two CA/MP
instructional staff members, an additional two teachers added tentatively for the elementary
portion of the program. That is eight teachers. It says that this represents a total of 12
teachers. He asked where the other four teachers are.
Mr. Villani replied that the two elementary are the two that are going to be at RASA. That has
nothing to do with the Career Academy. There are going to be two additional teachers hired to do
what is presently the CA/MP. There are presently four instructional teachers at CA/MP. Two of
them are going to be used for an in-school suspension program. The other two will be used for
instruction.
Director Craig stated those are the 2.0 CA/MP instructional staff members listed under the fourth
bullet.
Mr. Villani said that is correct.
Director Craig stated that the other two are staying at CA/MP.
Mr. Villani said that they are not staying at CA/MP. They are going to the Career Academy and
serving in a CA/MP function. That is eight. The two being hired for the elementary component are
called "half ways." That is ten. There will be two additional that will be funded through
grants. That will be outlined in a memo on Friday.
Director Craig asked the second part of his question. Part of his recommendation was to see some
portion of CA/MP kept intact because he felt there were students who went to CA/MP who were pretty
good students who normally do not get into a lot of trouble but make a mistake and must spend a
day or two at CA/MP. He did not think it a wise thing to put them into the alternative setting.
He asked if he is correct that if this was not done and the original proposal was followed, it
would require the hiring of two people, because we could use those other two people in the
alternative setting for instruction.
Mr. Villani said that is correct.
Director Craig stated that is why those two positions are there, because of the change he brought
up. He wanted to make sure he understood.
Mr. Villani said he is correct.
Director Craig said that it seems to him that, as a group, they need to look at and evaluate if it
is worthwhile saving those two positions and putting those two people back into the alternative ed
instructional program and put all the CA/MP students in there or do as he suggested about trying
to keep those students separate from the students in the alternative education program.
Director Leeson said one of the things she noticed that she thought was of interest, when looking
at some of the old budgets, is that since the 2002-03 budget, the district has increased the
budget $38,857,000. With that increase, the district has not seen a corresponding increase in
test scores. Performance on the eleventh grade PSSAs is not improving. The dropout rate is not
improving. There was an increase in SAT scores, but it did not keep up with the national
increase. In that period, the district acquired 960 more students. The per child cost went from
under $9,000 to $10,800. Although she thinks our community is very supportive of education, she
thinks it is also supportive of results. She is not seeing the corresponding results to the
increase in costs of our educational programs.
Director Dexter, again on the technology issue, wondered if there is information that breaks down
the budget and how it would look if the board does not adopt the proposal to roll out ninth grade
laptops. She would like to know if information has been assembled about salary savings, computer
costs, software, insurances and anything pertaining to possible roll out. The reason she is asking
this question is that the district has engaged in a very expensive and experimental program with
the one-on-one laptop initiative. There is no data that she knows of that tell us it is a
successful initiative. A study was done and presented last year. She noticed there is absolutely
no data to analyze academic achievement and whether or not laptops have improved scores or
measurable achievement. She has asked for but has not received information about whether school
attendance has been affected. Dr. Cates asked students to rate how they feel about school. There
was no change from the beginning of last year to the end of last year. On measured improvement in
technology skills, the change that was measured from baseline to the final report was noted as
small, almost imperceptible by some people's standards. Now, the board is asked to support a
rollout of yet another very costly addition. She asked if a program should be paid for not even
knowing whether it has met the goals in the first instance. Many people in our community simply
cannot afford this kind of boondoggle. If it takes five years to determine how the laptop
initiative has progressed towards our goals, we need to wait those five years. Don't add to the
program at the cost of who knows what when people who can't pay school taxes are losing their
homes. Her bottom line is that she thinks there should have been a presentation before the board
was asked to fund this increase with data. One of her questions is why funds are being requested
to roll out the ninth grade additional laptop computer. Part two is if the data of expected
savings to the budget has been compiled if this board does not approve a ninth grade rollout.
Director Koch stated this part of the meeting is supposed to be for asking questions, not giving
opinions and not debating. She is concerned that the board will get bogged down in a debate and
not be able to get all board members' questions asked.
Dr. Lewis said he would like to answer the question relative to the timeline. Mrs. Lutcher will
do a full presentation on the laptop initiative on May 8. There is plenty of time to rethink this
proposal to add laptops to grade nine based on that presentation. The district is also engaging
Penn State University. Mr. Villani, Mrs. Lutcher, and he had a videoconference with Dr. Kyle
Peck, who is renowned and who has collected a lot of data relative to one-to-one initiatives. He
has agreed to conduct a study on student achievement. There are many variables affecting student
achievement. To categorize improvement or growth based on one single variable is virtually
impossible. Also, Dr. Cates is coming back to look at the ninth grade implications to gather
baseline data. The very fact that the state of Pennsylvania has embarked on the classroom of the
future initiative and has come to Bethlehem to look at this and ask for our input, basing their
state initiative on what the district has done the last three years, he thinks speaks volumes.
Their research department continues to believe that technology as a tool in the hands of children
is a benefit. The naysayers are out there. We can find data both ways. Dr. Lewis stated he is
committed to this. He believes it makes a difference.
Mrs. Lutcher said that she spent a good amount of time talking with Dr. Cates and Dr. Peck when
she attended the One-to-One Computing Conference at Penn State. Bethlehem was asked to present
and be part of the round table discussions. Both Evon Zundel and she participated. They are very
interested in helping the district evaluate. One thing that needs to be understood is that many
schools don't have achievement data for the simple reason that when you roll out a one-to-one
initiative, in order to get that data, you need a control group. Dr. Lewis made the decision to
include all four middle schools instead of providing computers to three middle schools and not to
one middle school which would have been a control group. Dr. Peck is going to help with that.
East Stroudsburg University is interested in doing an evaluation. This past year, a number of
student teachers have been at our middle schools from East Stroudsburg University. In talking
with Dr. Lare and Dr. Whitehead at East Stroudsburg University, they were very amazed at the skill
level of our middle school students. This is a Skill-21 initiative. We are meeting the goals of
the Skill-21 initiative and the skills our students will need for the twenty-first century. The
evaluation process, this year, continues. Staff is out at all four middle schools on a regular
basis observing classes. Charting is done on how the computers are used, what the students are
doing, how computers are used in daily lessons. Interviews and discussions have taken place with
the teachers at the middle schools as to how their teaching has changed and how the learning
process has changed. Those teachers will be part of the presentation on May 8.
Director Dexter asked what the dollar change would be if the district does not have the ninth
grade initiative.
Mrs. Lutcher said she would get that information to Director Dexter. She explained that in
speaking about infrastructure and training some of those dollars, even when being used for the
laptop initiative, are also being used for other areas. When a wireless is put in the high school
next year, it is not only going to be for the carts. It will be for other computers using
wireless. When switches are put in the infrastructure closets next year at the high school, it
will not just be for the laptop initiative. It is also going to be for the voice over IP phone
system. Those same switches are going to take care of the phone system, laptop, and labs that are
hard wired. In breaking out dollars and sense, a lot times the planning is to make sure all
technology is working together so the dollars are used as wisely as possible. She will get the
information for Director Dexter.
Director Williams was concerned to make anybody not aware of what the procedure has been at past
budget hearings, that the board makes a list and administration returns to the board with the
impact of possible exclusions.
Director Koch stated she anticipates that to occur at the end of the next budget meeting. The
next meeting will be a lot more discussion.
Director Amato questioned the expenditures, second bullet. Monies are included for proposed leases
for the new Career Academy Alternative Education program, the new Fountain Hill Kindergarten
Center, along with a continuation of a lease for Donegan Kindergarten Center. He would like to
know the cost per month, per year, for leases for those facilities. Mr. Majewski said that two of
the leases are still under negotiation. The district spends $72,000 a year on the lease through
Holy Ghost for the Donegan Kindergarten Center.
Director Amato questioned bullet 8. Athletics has seen an increase of 6.89 percent or $109,114, a
six-figure increase, due to additional events in the Bethlehem Area School District Stadium, the
anticipated opening of Freedom High School gymnasium. He stated we are very proud of the
facilities we have. Those facilities were put up so that we could attract district and regional
competition. With Freedom coming aboard, the district will have a great gym there. We have a
great gym at Liberty. He asked why it is costing the district money when we have these events.
Increases listed are for additional officials costs, salaries, supplies, etc. If the district is
renting these facilities out, it shouldn't cost us anything. It should at least be a break-even
result.
Mr. Villani stated that the school district stadium, since being turfed last year went from 13 or
14 events which were strictly football games to 37 different contests that were district-sponsored
sports events in football, soccer, girls field hockey. The increases are part of the costs
relative to ticket sellers, police, security, game help, and officials.
Director Amato said that if a district soccer competition is held there, that event should pay for
those costs. If it costs the district $109,000 to have those events, we should not have these
events.
Mr. Villani explained that, previously, soccer and field hockey teams were not permitted to play
in the stadium.
Director Amato said that if the soccer events weren't at the stadium last year, on the beautiful
turf, those events were held somewhere else, also requiring paid officials, etc.
Director Craig said that two kinds of things happen. Playoffs don't cost the district anything.
District XI pays for it. The events he thinks being referred to are the additional Liberty plus
Freedom events that are held in the normal season. The soccer and field hockey events used to be
played at four o'clock on a field somewhere, involving no lights, no custodial staff, and no
security. He thinks Liberty and Freedom played almost every home soccer and field hockey game in
the stadium this year. That added costs.
Director Craig stated that every year, the Lehigh Valley Conference increases their officials'
fees a couple of bucks.
Director Amato said that if the events are taken from an off-site to the stadium resulting in
security, maintenance and custodial costs, there is something wrong. When those events were held
off stadium, somebody had to line the field and get it ready to play. The stadium is permanently
marked.
Dr. Lewis said one of the confusing points is that the opening of the Freedom gym has been
anticipated, multiple security needs, additional adults to run evening programs there, ticket
takers, etc., have been anticipated. These costs are spread out. Supplies are one of the
heaviest.
Mr. Villani said that last year the board put rifle back in the budget. Administration did not
have it budgeted originally. That accounts for $11,000 of the increase.
Director Amato said that it is still at $100,000.
Dr. Lewis will give a breakdown of the increase for athletic events for the next meeting.
Director Leeson said she had the same question as Director Amato on the athletics increase. The
district has advertising revenue that is supposed to be offsetting some of the stadium costs.
Dr. Lewis said that is not true. The advertising revenue is to pay for the $1.5 million loan of
which the district has drawn down $1,000,000 back to Sovereign Bank. There is no revenue coming
in to offset general operating or athletic costs. At the point of the loan being paid in full,
you can take a look at whether or not to use advertising revenue for scholarship monies, Freedom
improvements, or what have you.
Director Leeson asked if we don't have a promise from Mr. Banko.
Dr. Lewis said the Banko loan is $100,000 annually. The district has accrued interest costs on
that note. Drawdown was a million. The district paid back about $250,000. The district will
annually collect approximately $100,000 at 80 percent inventory along with Mr. Banko's
contribution. Interest costs must be calculated into that. The interest, unfortunately, is not a
tax-exempt note because we did not borrow as a tax-exempt organization. Our guarantor is Mr.
Pektor from Ashley and the district is paying a premium rate.
Dr. Lewis said that he thinks he can answer Director Amato's question. Page 102 has the breakout
and shows where that $109,000 increase falls. There are some critical line items the district has
very little control over.
Mr. Villani said that most of the items are salary related.
Dr. Lewis pointed out the coaching salary increase. Ours is a large district with a multitude of
programs across six secondary schools. Just the increase in salaries, contractual obligations in
that regard, are close to $38,000. Perhaps the transmittal explanation is unclear.
Director Amato said he would not have stated that as "Athletics has seen an increase of $109,000
due to additional events at the stadium." Wherever those events were held two years ago, this
increase would have been the same whether those events are held at those venues or at the new
venue.
Mr. Villani said that about $13,000 of the increase is because of increased events at the stadium
and anticipated at the gym.
Director Leeson said she had the opportunity to spend some quality time with Mr. Majewski on the
phone in the afternoon. She thanked him for spending so much time in answering a lot of her
questions. As she remembered from last year, $3,500,000 was taken from the fund balance, bringing
it down to $5,000,000. This letter noted that another $3,000,000 would be taken. It concerned
her that the fund balance might be getting down to around $2,000,000. She stated that Mr.
Majewski assured her that was not the case. There was $2,000,000 of the fund balance that was not
needed. Instead of being at $5,000,000 this year, it is at $7,000,000. Taking $3,000,000 out
will bring it to about $4,000,000 to $4,500,000. She asked Mr. Majewski if that is correct.
Mr. Majewski replied that it is correct. In the current year budget, there is $3,500,000 budgeted
for use of fund balance. Current projections indicate that about $1,000,000 to $1,500,000 will be
needed, but not $3,500,000.
Director Leeson said she also noted that we had an increase in revenue. She calculated the
increase in revenue to be about 4.5 percent. With the 4.5 percent, the increase in basic funding
from the state of 6.5 percent, and the additional $2,000,000 not needed in the budget last year,
it appears to her that we could probably meet cost of living increases without having to go to a
tax increase. She asked Mr. Majewski if that is correct.
Mr. Majewski replied, "No." He believes in order to be able to balance the budget as it is right
now requires, even with the changes that have been made, a 4.36 percent increase in the millage
rate. If that additional revenue was taken out, it would be an unbalanced budget.
Director Leeson said she is not talking about an unbalanced budget. Those things that do not
address cost of living increase would have to be removed. The budget would have to stay within a
cost of living increase budget.
Mr. Majewski said that would be fine other than the gas companies, electric companies, all are
going up at a rate significantly higher than a cost of living increase. PSERS doesn't give the
option of paying only up to the index. Even health benefits, which is more modest this year in
the way of an increase, is not capped by that. In order to come in with a zero millage increase
at this point, somewhere within the budget we would need to find revenue of $4,072,000 or cut
programs in that amount.
Director Amato asked what the actual increase is.
Director Leeson stated the budget has gone from $156,000,000 to a total budget of $168,000,000.
She believes it is a 7.7 percent increase.
Mr. Majewski said that focusing on the general operating portion of the budget because grants are
a dollar-for-dollar increase or decrease would provide a more appropriate response.
Director Amato asked if there was no millage increase, no increase in revenue which is 4 percent,
what the district would be asking the taxpayers to fund, if it would be an increase of something
like 9.2 or 9.9 percent. The whole point is that it is not going up 5.5 percent that we have.
Spending is actually going up over 9 percent if you add the increase in revenue versus the
increase we are asking for of 5.5 percent.
Mr. Majewski and Dr. Lewis both said, "No."
Mr. Majewski said it is 7.77 percent. However, he will adjust that because $935,000 was just
taken out.
Director Leeson said there is a 4.5 percent revenue increase and a 7.7 percent increase with the
millage. The difference is the millage increase portion of it. That would be about $400,000
reduction from the current budget.
Mr. Majewski said that is correct. He stated that administration presented revenue to be able to
support the expenditures. If the board wants a zero millage increase, the expenditure budget must
be reduced by $400,000. Looking at receipts, $400,000 was added as a result of the tax increase.
We had approximately $7,800,000 increase in revenue.
Director Leeson said her point was that last year the district would have survived with $2,000,000
less than what was in the budget.
Mr. Majewski said she is right, we would have. The problem is, when you look at the budget, we
don't know what activity will occur, what grants will be awarded to allow taking off some costs.
As the year goes on, administrators try to find opportunities to provide programs and reduce the
budget. It is wonderful in hindsight to be able to say, "We could have done that." It is an
attribute to the staff that it took the time to find ways to reduce taxpayer spending. If the
issue is that we are going to budget $3,500,000 worth of fund balance, we better darn well spend
it, then it won't be necessary to take the initiative to try to find ways to save taxpayer money.
But, we do, and take pride in doing that.
Director Leeson said she believes, though, that the fund balance is also the place we go when we
have extra programs and extra expenses within the year. Therefore, we can trim our budget.
Mr. Majewski said that is not the way that works. We can only spend to the level of approved
budget. If the district spent beyond that, it would be cited and be in violation of the school
code. The reason the fund balance is incorporated is that it gives a top end where we can meet
our expenditures without violating the law. If the district did not use or budget any of that
fund balance and balanced the budget but knew we were going to spend that money anyway, when we
were done, our budget would be less than our actual and we would be in violation of the school
code. We need to do this. At this point in time, he can say looking at everything that went into
the budget, that he anticipates that $3,000,000 of fund balance is needed in order to balance the
budget. All that being said, the day after the budget is passed, all are looking for ways to be
able to not use $3,000,000 as the year goes on. He thinks that is good business practice. He
would not want to be put in a position of being looked upon poorly because of trying to find ways
not to spend that fund balance. Right now, this is necessary to balance the budget with the
spending patterns that we have. Going through the next couple of weeks, if we get additional
revenue, it will be put in and the millage increase will be lowered. Very likely, the fund
balance requirement won't be lowered because the goal now is to be able to lower the millage
increase. If expenditures are found that administration doesn't think it is going to need,
administration will come back and report that. The process is not done until the end of June. He
guarantees administration's goal is the same as the board's. He does not want to tax more than is
absolutely necessary.
Director Koch said that perhaps there is some merit to Director William's suggestion that perhaps
an amount should be stated at this point so that next week there can be discussion about that
amount of reduction. She feels it is not proper for her to make the motion. She gave a history
of what happened last year. Last year, she proposed a $2,000,000 cut that was voted down because
some people wanted more than that. Because the rest of the board would not support more than
that, it wound up with a $1,000,000 cut. Therefore, she suggested that if somebody does propose a
$2,000,000 cut, think really hard about accepting that because there is no way that something
higher will pass with a majority of the board. She asked if anybody was prepared to put that in
the form of a motion.
PROPOSED LISTING OF POSSIBLE REDUCTIONS UP TO $4,000,000
Director Leeson said she would also like to share a little history. The history is that the
district could have done without $2,000,000 additional in the budget. When Director Koch asked
for $2,000,000 and she, herself, had asked for more than that, she thinks when coming to the table
to discuss, the board ought to discuss all possible scenarios and be open minded enough to be
looking at the lowest possible cuts as well as what one might consider acceptable. Director
Leeson proposed that the administration come back to the board with a zero tax increase budget,
showing in each category: $1,000,000; $2,000,000; $3,000,000, and $4,000,000 and what would be
required to get to the zero increase. Director Dexter seconded the motion.
Director Craig asked if $4,000,000 is the magic number that makes the budget a zero tax increase.
Dr. Lewis said the number is $4,720,000. Dr. Lewis cautioned that going to a $4,000,000 or a
$3,000,000 reduction would mean cutting programs. There are some inordinate escalators in this
budget in utility costs, fuel costs, retirement contributions, and health care that cannot be
touched. If you are going to maintain current programming with higher costs in those regions, you
will see severe cuts in programming.
Director Williams said she has a problem with considering $4,000,000 decrease to the budget
because, as Director Koch alluded to in her history, if we do that, we are looking at more cuts
than she is personally prepared to look at. If the board asks the administration to come back
with a total of $4,000,000 in cuts, she suspects we are looking at a different scenario than if
they were asked to look at $1,000,000 and $2,000,000. It is not just a matter of taking million
per million. She suspects that the board could decide on a maximum figure it would like to look
at and then break it down. All know that looking at $4,000,000 is making deep cuts. The offset
of the fund balance is a 1.8 percent offset of the budget at $3,000,000.
Director Amato said he sees Director Williams' point, but he does not have a problem with the
motion. He said to Dr. Lewis that he hears this at every budget hearing. If higher numbers are
cut, it will affect programs. Maybe there are programs that need to be cut. Our problem is when
we put new programs in; we don't completely cut out the old programs like we did with the Career
Academy by keeping a portion of CA/MP. As a district, we took to heart No Child Left Behind and
we are good for that. But, maybe there are some things that need to go. There was debate about
the technology initiative every time somebody asked a question. He thinks people have forgotten
that you can sell technology by showing the rewards of technology. He sees a fat $700,000 in
upgrading and replacing textbooks for subjects such as mathematics, reading, and language. He
questioned that the laptops can't start to dig in to those textbooks and get those on line if we
are going to have laptops. Get the best of both worlds. Help sell technology, which he is
absolutely for. But phase the old out as we phase the new in.
Mrs. Lutcher explained to Director Amato that textbook companies are not allowing that at this
point. In order to buy the online version, the district must buy the print copy. Textbook
companies are using both now. They are not at the point of just selling the online version. When
the district buys a hard copy, we can get the online version.
Director Heske stated this is his thirteenth budget. The proposal to go up to $4,000,000 one
million at a time is a waste of everybody's time. We will never cut $2,000,000. The board always
ends up putting more things back into the budget at the end. To go further than $2,000,000 is
really unrealistic.
General discussion occurred on the number of budget meetings and the timeline. Dr. Lewis said
that if the board plans to reduce the millage impact, the administration would prefer that the
board arrive at that basic decision tonight. If additional information is coming forward, the
board has the opportunity to reduce the budget further at an upcoming hearing. DIRECTOR LEESON
ROLL CALL $4,000,000 LISTING OF REDUCTIONS
Director Koch stated that a motion has been made on the $4,000,000 reduction. The board needs to
vote on this before going on to anything else. The question was called on directing the
administration to provide a report listing items involved for reductions in increments of
$1,000,000 up to $4,000,000 and roll call was as follows: Yea, Directors Amato, Dexter, and
Leeson - 3. Nay, Directors Rowe, Williams, Heske, Haytmanek, Craig, and Koch - 5. Motion failed
3 - 5.
DIRECTOR CRAIG PROPOSED LISTING OF POSSIBLE REDUCTIONS UP TO $2,000,000
Director Craig, as a motion, said he would be willing to support administration reporting on
$1,000,000 and $2,000,000 of reductions. The board still has time after that to decide if it
wants to go more or less. Director Rowe seconded the motion.
Dr. Lewis asked if the information could be prepared in half million increments. No one objected.
Director Rowe said she wanted to elaborate on what Director Craig said, that if the board can see
$2,000,000 worth of cuts from the administration and does not see significant cuts in programming
that affects students, then she would be the first in line to look at more things to cut. She
thinks $2,000,000 is a reasonable place to start without wasting the time of administration and
having to put everything back.
ROLL CALL $2,000,000 LISTING OF REDUCTIONS
The question was called of having administration report on $1,000,000 and $2,000,000 of reductions
and roll call was as follows: Yea, Directors Rowe, Williams, Heske, Amato, Haytmanek, Dexter,
Craig, Leeson, Koch. Motion passed 9 - 0. Director Dexter asked Director Koch if the public
could be asked to speak. Last year they had to wait three hours.
Director Koch said she understands but would like to finish with the board first.
Director Leeson spoke on debt service. She had asked Mr. Majewski during the afternoon for the
amatorization schedule.
Mr. Majewski explained that he has this in a PowerPoint form which means that it will not be
totaled. If the board wishes, he could make it available Director Leeson said she is really just
interested in the sheet of the amortization schedule, not in the entire PowerPoint.
Mr. Majewski said he will make sure it is in Friday's packet for the board to review.
Director Leeson asked how much total debt has been committed to being taken out in 2005 and 2007.
Mr. Majewski replied that '05 has already been taken out. That was $55,000,000. Still pending to
be settled: in January 2007 is a $55,000,000 settlement and in September 2007 an additional
$40,000,000 for a total of $145,000,000 between 2005 and 2007.
Director Leeson asked what the district's borrowing capacity is.
Mr. Majewski said that the borrowing capacity, as it stands right now, is about $17,000,000.
Director Leeson said that there is $17,000,000 left, but asked what the total borrowing capacity
is.
Director Dexter stated Mr. Majewski has told her it was $315,204,063.75.
Director Leeson asked if we are getting a little tight. The district only has $17,000,000 left of
our borrowing capacity. There is a huge increase in costs because of borrowing, because of debt
service.
President Haytmanek complimented the three persons attending the meeting who do not have a direct
relationship with the district.
COURTESY OF THE FLOOR TO VISITORS
The following person addressed the Board of School Directors.
1. Mr. Gene McKeon, 5045 Harvey Road, Bethlehem, began to ask a question.
Director Koch apologized for interrupting. She stated the board and administration will not
be answering questions this evening. Answers will be forthcoming.
Mr. McKeon said he would like to understand the budget assumptions regarding utilities. He
guesses that Mr. Majewski is way over budget (Mr. Majewski confirmed) because no one could
have foreseen the natural gas price. We could see the run up because there was an alleged
shortage of natural gas in the spring last year. No one could anticipate the effects of
Katrina and the second hurricane that had a dramatic impact on the pipelines. He saw in the
paper there is a 40 percent increase in utilities. Maybe, budget-wise there is. In reality,
he thinks actual expenditures and projected budget expenditures are going to be fairly close.
Mr. Majewski said that his projected budget for next year is less than he is expecting the
actual to be this year.
Mr. McKeon questioned why the occupational privilege tax budget was down $60,000.
Mr. Majewski explained that the occupational privilege tax has been renamed emergency
municipal services tax. What has affected the district is the municipalities increasing the
exemption level from $1,000 to $12,000 which has lowered our receipts.
Mr. McKeon said he was equating that to the five dollars the district was getting.
Mr. Majewski said that the exemption level has increased from $1,000 to $12,000. Director
Craig stated that the city is still $1,000.
Mr. McKeon said it really has to do with budgeting. Obviously a dollar amount is factored in
based on the grant submitted or had in the past year, looking for some consistency. He asked
what happens when you end up with increase in a grant seat. In that particular program, it
was a $300,000 increase. He asked if the school district picked up $100,000 originally, now
the grant comes in and allows you to subsidize it with the grant.
Dr. Lewis stated that is called supplanting. Those categorical grants do not permit it. The
district can't take an existing teacher, take that $300,000 and pay for six teachers already
existing. That would be called supplanting. That is unlawful and against the terms of the
federal grants. New money must be spent in the category designated.
Mr. McKeon asked to use an assumption that the district is anticipating getting $100,000 from
state/federal funds. The government comes in with $150,000. He asked what happens to that
previously funded $100,000.
Dr. Lewis said it would depend on the language of the grant. In all cases the district would
only get funding for the exact amount it spent, up to the limit of the grant.
Mr. McKeon said his concern is that this would spend $100,000, not the $150,000 and the
$50,000 would go back into the reserve.
Dr. Lewis said that is not possible.
Mr. McKeon asked how much money is sitting in the budget for meet and discuss separation
packages. All administrators, when retiring, are able to collect $1,000 for every year of
administrative service.
Dr. Lewis said there is separation with retirements of teachers, etc.
Mr. McKeon said he is talking about the administrators. The school district has a policy that
allows the district to compensate retiring administrators $1,000 for every year of
administrative service.
Dr. Lewis stated he did not have it categorically broken out. District-wide amount is
$125,000 for 39 retirees this year, four building administrators, two supervisors. That is
roughly what the district might spend for 43 people and their benefits.
Mr. McKeon asked Mr. Majewski if he could supply or publish what has been paid in the
retirement separation package over the last three years. He estimated that last year the
district paid almost half a million dollars.
Dr. Lewis responded that Mr. Majewski will be glad to do that.
RETURN TO QUESTIONS FROM THE BOARD
Director Leeson referred to page 75. Testing has gone down significantly over the last couple of
years. She asked if that could be explained.
Mr. Villani said that in the last several years the state has required testing: the 4SIGHT
Testing, the G-MADE testing, and G-RADE testing, in addition to the PSSA. The district is
permitted to pay for that testing and the scoring of that testing out of grant monies. The PSSA
scoring is paid for by the Department of Education. Because of all the additional testing being
required by the Department of Education, the district has cut back on the TerraNovas for next
year. Several years ago the New Standards Reference exam was still given, a very costly exam to
score. That is no longer given. The amount of testing has increased, but the district doesn't
have to pay for the testing.
MOTION TO ADJOURN
Director Heske moved to adjourn the meeting. Director Amato seconded the motion.
Director Dexter said some information she requested at the meeting last week was conference
spending. She had requested attendance figures for the laptop users. She stated that she wanted
to request additional information - a break out of academic intervention spending school by
school. She asked Mr. Majewski if it is possible to get that information.
Dr. Lewis said he can answer that. Administration will do the combined charting on that of
district spending, TIP money, etc. It will be provided in the Friday packet.
Director Dexter referred to the superintendent's budget, contingency fund. She saw some changing
around of figures and wondered if Dr. Lewis reordered how certain expenses are categorized.
Dr. Lewis said some of those dollars have been recategorized. The contingency dollars are
distributed out throughout the year in those various other areas that you see in the actual
expenditures in the first column, depending on where services are needed. Detention, advertising,
postage and communications are covered by his budget. That $91,000 is redistributed as needed
rather than go through a series of budget transfers, Mr. Majewski prefers to handle it this way.
Director Dexter said that the board authorized him to spend conference money. She wondered if he
approved conferences without coming to the board, within the limits. She asked if that comes out
of the superintendent's budget line or the department that requested the conference.
Dr. Lewis said that, as a rule, it goes by the department that requested. That has been broken
out. The conferences under 580 are the principals and administration.
Director Dexter asked for an explanation of conference expenses from the superintendent's office
going down significantly to $14,200, from $57,465 two years ago.
Dr. Lewis said that the proposed are the anticipated; the actual are what would be moved from
contingency into that account. As principals would request to attend conferences, that money
would be moved in. There will be a significant difference between the actual and the proposed in
that regard. He is not anticipating how many principals wish to attend national and statewide
conferences.
Director Dexter asked if he is saying that some of the $91,000 contingency fund might add to the
actual conference spending on the superintendent line.
Dr. Lewis replied, "No. Not at my level, on the administrative level."
Director Dexter asked if the $57,000 that was spent in 2004-05 on conferences includes other
expenses that are somewhere else.
Dr. Lewis responded that the majority of the $57,000 was spent on conferences attended by building
level administrators and not the superintendent.
Director Leeson asked how many textbook series are replaced annually and what the cycle is for
replacement of textbooks.
Mr. Villani said that if you look at the textbooks in the curriculum cycle, there are two or three
different subject areas looked at in any given year. This was the year, specifically, for the
reading/language arts. Math was added because the math was done previously. The math is being
brought back. That is why the increase for those textbooks went up.
Director Leeson said that he did not answer her question. Her question is very simple. She asked
how many series are normally replaced in one year.
Mr. Villani stated not understanding the question when she says "series." There is a five-year
curriculum cycle. Two or three subject areas are within that cycle. Textbooks for those
particular subject areas are considered for purchase.
Director Leeson stated that every year the district considers replacing two to three textbooks.
Mr. Villani said it is two to three textbooks for two to three different subject areas. For
example, for social studies a series is reviewed of eight to ten textbooks used in the social
studies curricula. In a given year textbook purchases will be adopted or revised for that
particular area. It is not just one text; it is a series of texts.
ADJOURNMENT
Director Koch said she understands that there are more questions. However, there has been a
motion and a second that some of the board members want to end the meeting. She asked how many
are in favor of ending the meeting now. All directors except Directors Leeson and Dexter were in
favor of ending the meeting. Director Koch announced that the meeting was adjourned at 9:13
p.m.
Attest,
Stanley J. Majewski, Jr.
Board Secretary
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